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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
HUNGARY
- Yesterday, the NBH decided to leave its effective policy rate steady at 6.45% (as expected) despite the elevated inflationary pressures and the HUF ‘weakness’.
- Even though policymakers have been calling inflation a ‘public enemy’ and the HUF weakness is supporting inflation expectations, the forint is currently driven by factors outside of the monetary policy realm (i.e. geopolitical uncertainty).
- Hence, the NBH has tried to limit the interventions via the 1W depo rate facility and stick to ‘monthly decision’ along with the ‘core’ policy rate.
- Hiking too aggressively may not have any ST impact on HUF and would accelerate the economic slowdown.
- The chart below shows that the sharp tightening in in financial conditions (i.e. surge in ST rates) has been pricing in a significant slowdown in the economic activity in H2
- Next meeting will be on May 31; the NBH is likely to reduce the pace of the tightening cycle on the ‘non-effective’ policy rate and raise it by 50bps to 5.9%.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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